for cargo, and $100,000,000 for seamen. Now, we put that in here because I anticipated some such question; but I would not attempt to justify that, because it is merely an estimate. But it is a possible answer and is the best answer I can give as to the maximum.

Mr. TABER. How much insurance do you think Lloyds have outstanding currently, of that type of insurance?

Admiral LAND. I cannot answer that, because the Government has done, in Great Britain, what we are aiming at here. Maybe Mr. Ogden could answer that; but the Government has taken care of this war-risk insurance over there, and how much they have I do not know; but I would imagine the amount would far exceed this amount, because we are covering 1,000 ships, and they have at least four times as many ships as we have. In other words, they have 21,000,000 tons of shipping, without counting any they have taken over, or without deducting losses, which would reduce it 1,000,000 tons, say; but they have also added to their merchant marine, as you know, a great many ships of the so-called technical enemies. But that would at least run into a comparable figure, I should say, of six, seven, or eight billion dollars.

Mr. LUDLOW. Would you place any of this insurance in foreign companies except Lloyd's?

Admiral LAND. Not unless they had some kind of trust fund.
Mr. LUDLOW. Similar to Lloyd's?

Admiral LAND. Similar to Lloyd's, or the other British firms that either have or are considering having an indenture trust fund.

Mr. LUDLOW. In the case of companies of nonbelligerent countries, would you require this trust fund-or are there any such companies? Mr. OGDEN. There are not any such companies.

Admiral LAND. I was going to say, unless you go to Japan, and we would not have much necessity of insuring with a Japanese company. We never have.

Mr. TABER. How much would you figure the British had put up in a fund similar to this, for their operations?

Admiral LAND. I do not know, Mr. Taber; I cannot answer that. Mr. TABER. Can anyone else?

Admiral LAND. We won't know until after the war.

Mr. TABER. Can you tell us?

Mr. OGDEN. No; I cannot.

GROSS AMOUNT OF INSURANCE WRITTEN UP TO 1919

Mr. TABER. How much did we put up in the World War for this type of insurance?

Mr. OGDEN. Finally, $50,000,000.

Mr. TABER. And how much insurance were we carrying at that time?

Mr. OGDEN. At one specific day we know about, there was $115,000,000.

Mr. TABER. That was the maximum?

Mr. OGDEN. Yes.

Mr. TABER. How much would you anticipate you would get in the next 2 or 3 months, say?

Mr. OGDEN. If the market remains stable and it will take care of the business, we anticipate the Maritime Commission would not write

any insurance. It is only when the market breaks down, either for lack of capacity or lack of what we would consider adequate rates, that we would step in.

Mr. TABER. If we put up $25,000,000, we would be putting up enough to cover that situation?

Admiral LAND. I do not think so; because we have three times the commerce that we had in 1914-17.

Mr. WIGGLESWORTH. Suppose this act had been on the books 6 months ago, how much would we have actually used for insurance? Admiral LAND. I doubt if we would have used any, because we did not have the conditions 6 months ago that obtain now, and we did not have the ships.

Mr. JOHNSON of West Virginia. Again, let me ask you this question: You are not going to use this money unless you have to? Admiral LAND. That is right.

Mr. JOHNSON of West Virginia. And it is not going to cost the Government anything, whether we give you $50,000,000 or $25,000,000, unless you have to have it?

Admiral LAND. That is absolutely right.

Mr. JOHNSON of West Virginia. And this is a matter of precau

tion?

Admiral LAND. That is right.

Mr. JOHNSON of West Virginia. Closing the door before the horse is stolen?

Admiral LAND. That is right. It is just part of preparedness. Mr. KIRSCH. Mr. Tabor, I possibly can give you some figures that you inquired about. These are figures taken from reports by the former Bureau of War Risk Insurance, during the last war. They began writing policies in September 1914. By November of 1915, before we got into the war, they had written 1,283 policies, for a total amount of insurance of $90,000,000. By November 1916 that increased to $163,000,000; by October 31, 1917, when this country was in the war, that had increased to $856,000,000 and, by June 30, 1919, there had been 27,000 policies issued, with the amount insured of $2,000,000,000. That is without the seamen's risk.

Mr. TABER. You mean $2,000,000,000 was the maximum amount that was outstanding at one time?

Mr. KIRSCH. No, sir.

Mr. TABER. Or was the gross amount?

Mr. KIRSCH. That was the gross amount written up to 1919.

Mr. TABER. And could you give us what was the maximum amount outstanding at any one time?

Mr. KIRSCH. Well, the first year there was written $90,000,000 of insurance. For the amount outstanding at any one time, June 30, 1918, furnishes a good figure. There was then outstanding $115,000,000.

Mr. TABER. $115,000,000?

Mr. KIRSCH. Yes, sir. That is without seamen's risk. The seamen's risk piled up during the 4-year period to over $300,000,000. Mr. TABER. What is "seamen's risk"?"

Mr. KIRSCH. That is personal injury of seamen, masters, and crew, and it covers detention of masters and crew.

245218-40- -2

COPY OF MARINE INSURANCE ACT

(The following is a copy of the Marine Insurance Act :)

[Public, No. 677]

SEVENTY-SIXTH CONGRESS OF THE UNITED STATES OF AMERICA; AT THE THIRD SESSION, BEGUN AND HELD AT THE CITY OF WASHINGTON ON WEDNESDAY, THE THIRD DAY OF JANUARY, ONE THOUSAND NINE HUNDRED AND FORTY

AN ACT To amend the Merchant Marine Act, 1936, as amended, to provide for marine war-risk insurance and reinsurance and for marine risk reinsurance, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That title II of the Merchant Marine Act, 1936, as amended, is amended by adding at the end thereof a subtitle to read as follows:

"SUBTITLE-INSURANCE

"SEC. 221. (a) For the purpose of protecting the water-borne commerce of the United States from the impediments and burdens arising from the lack of adequate facilities for the insurance of such commerce, due to extraordinary risks arising under existing war conditions, the Commission is authorized to provide marine insurance and reinsurance against loss or damage by the risks of war and reinsurance against loss or damage by marine risks, as prescribed in this subtitle, whenever it appears to the Commission that such insurance adequate for the needs of the water-borne commerce of the United States cannot be obtained on reasonable terms and conditions from companies authorized to do an insurance business in a State of the United States.

"(b) There shall be in the Treasury of the United States a revolving fund to be known as the marine and war-risk insurance fund (hereinafter referred to as the fund), to be used for carrying out the provisions of this subtitle, and to be constituted of such sums as may be appropriated to such fund and of moneys and receipts credited thereto as herein provided. There are hereby authorized to be appropriated to such fund such sums as may be necessary to carry out the provisions of this subtitle. All moneys received from premiums and from salvage or other recoveries, and all receipts in connection with this subtitle shall be deposited to the credit of such fund. Payments of return premiums, losses, settlements, judgments, and all liabilities incurred by the United States under this subtitle shall be made from such fund.

"SEC. 222. The Commission may insure against loss or damage by the risks of war, property, as follows:

"(a) (1) American vessels (including vessels under construction), (2) cargoes shipped or to be shipped therein: Provided, That in the event of the suspension of the present neutrality law no vessel or its officers and crew, carrying contraband and no cargo of contraband shall be insured under any provision of this Act, (3) their disbursements, and freight and passage moneys, and (4) personal effects of the masters, officers, and crews of such vessels.

(b) (1) Commercial vessels (including vessels under construction) owned or controlled by the United States or any department or agency thereof, (2) cargoes owned by the Government or in which the Government has an insurable interest, to the extent of such interest, (3) their disbursements, and freight and passage moneys, and (4) personal effects of the masters, officers, and crews thereof. "SEC. 223. (a) The Commission may reinsure any company authorized to do an insurance business in any State of the United States on account of marine and marine war risks, including protection and indemnity risks, assumed by any such company, or (1) property or interests as set forth in section 222 (a) and (b) of this subtitle, and (2) masters, officers, and crews of American vessels (including any such vessel owned or controlled by or chartered to the Commission) against loss of life, personal injury, or detention by any government except that of the United States following capture.

"(b) The Commission may reinsure, in whole or in part, with companies authorized to do an insurance business in a State of the United States, war risks assumed by the Commission under this subtitle.

"(c) Any department or agency of the United States is hereby authorized to procure insurance from the Commission as provided for in section 222 (b) of this subtitle, except as provided in the Government Losses in Shipment Act, approved July 8, 1937 (50 Stat. 479).

"SEC. 224. Whenever the Commission determines that insurance for masters, officers, and crews of American vessels against loss of life, personal injury, or detention by any government except that of the United States following capture, arising from risks of war, cannot, with the aid of reinsurance provided for under this subtitle, be obtained on reasonable terms and conditions from companies authorized to do an insurance business in a State of the United States, the Commission is authorized to provide such insurance on a basis corresponding to the war-risk insurance protection supplied, prior to such determination, for such personnel by companies authorized to do business in a State of the United States.

"SEC. 225. In the event of disagreement as to a claim for losses or the amount thereof, on account of insurance under this subtitle, an action on the claim may be brought and maintained against the United States in the district court of the United States sitting in admiralty in the district in which the claimant or his agent may reside, or in case the claimant has no residence in the United States, in a district court in which the Attorney General of the United States shall agree to accept service. Said suits shall proceed and shall be heard and determined according to the provisions of an Act entitled 'An Act authorizing suits against the United States in admiralty, suits for salvage services, and providing for the release of merchant vessels belonging to the United States from arrest and attachment in foreign jurisdictions, and for other purposes,' approved March 9, 1920, as amended (known as the Suits in Admiralty Act), insofar as such provisions are not inapplicable and are not contrary to or inconsistent with the provisions of this subtitle.

"SEC. 226. (a) The Commission in the administration of this subtitle is authorized to adjust and pay losses, compromise and settle claims whether in favor of or against the Government, and to pay the amount of any judgment rendered in respect of any suit or settlement agreed upon in respect of any claim. The determinations of the Commission with respect to adjustments, compromises, settlements, and payments hereunder shall not be subject to review by any other executive or accounting officer of the Government.

"(b) The Commission is authorized to prescribe such forms and policies, to change or modify such forms and policies as may be necessary or appropriate under the circumstances, and to fix and adjust, as may be required by circumstances, the rates and changes of rates of insurance provided for in this subtitle. "(c) The Commission is authorized and directed to prescribe such rules and regulations as may be necessary or appropriate to carry out the provisions of this subtitle. The Commission is authorized, in administering the provisions of this subtitle, to exercise its powers, perform its duties and functions, and make its expenditures, in accordance with commercial practice in the marine insurance business.

"(d) The Commission, without regard to the laws, rules, or regulations relating to the employment of employees of the United States, may appoint and prescribe the duties of such number of experts in marine insurance as the Commission may deem necessary in carrying out the provisions of this subtitle. The Commission, with the consent of any executive department, independent establishment, or other agency of the Government, including any field service thereof, may avail itself of the use of information, services, facilities, officers, and employees thereof in carrying out the provisions of this subtitle.

"(e) The Commission shall include in the annual report to Congress a detailed statement of all activities and of all expenditures and receipts under this subtitle for the period covered by such report.

"(f) When used in this subtitle the term 'American vessels' means vessels registered, enrolled, or licensed under the laws of the United States.

"SEC. 227. Nothing in this subtitle shall be deemed to affect the rights of seamen under any provision of existing law.

"SEC. 228. All the provisions of this subtitle shall expire by limitation March 10, 1942, or sooner upon a proclamation by the President that the extraordinary condition upon which it is predicated is passed."

Speaker of the House of Representatives.

Vice President of the United States and
President of the Senate.

MONDAY, JULY 8, 1940.

MARINE INSURANCE-WAR RISK INSURANCE

STATEMENT OF HON. SCHUYLER 0. BLAND, CHAIRMAN, COMMITTEE ON THE MERCHANT MARINE AND FISHERIES

Mr. WOODRUM. All right, Mr. Bland.

Mr. BLAND. Gentlemen, I do not want to take your time, but I want to emphasize this, that marine insurance and war risk insurance-marine insurance in time of peace, and marine and war risk insurance in time of war-constitute the lifeblood of transportation of commerce by water. Without it, you just simply cannot move. You have to have insurance on your ships, you have to have insurance on whatever goes into the ships, you have to have insurance on the personnel, and on the added risk, if there is war.

Now, the question was asked about what was done before. I want to read from the statement submitted to us by the Maritime Commission on the operations under the War Risk Insurance Act of 1914:

From the annual report of the Director of the Veterans' Bureau for 1923, page 675, it appears that operations under the Act showed losses of approximately $30,000,000 and an income from premiums and salvage of approximately $47,500,000, leaving a net operating profit in excess of $17,500,000.

Of course, there would have to be deducted from that something in the way of overhead for administration, but there was a considerable profit, that was turned into the Treasury of the United States, by reason of this operation.

Now, the question was asked as to the cause of not more than $4,000,000 being available. In 1920, I think it was, or certainly before that time, there was a careful study made by the Committee on Merchant Marine and Fisheries of the insurance situation in the United States. The only Members of the House now who were members of the committee at that time were the Speaker (Mr. Bankhead) and Dr. Crowther, and a full study was made of the subject of marine insurance and war risk insurance. During the period 1840-60, marine insurance in the United States was in its heyday, because our merchant marine was in its heyday. Then, from 1860 down to the time we attempted to rehabilitate the American merchant marine, marine insurance went out, because we did not have the ships here and we were not interested in it. It has only been since we have commenced to restore the American merchant marine that we have been able to bring back this business to the United States.

I want now to call your attention to what Mr. Hedge, who is an insurance man, had to say. Mr. William K. Hedge, president of the Boston Insurance Co. and the Old Colony Insurance Co. of Boston, who advocated the original bill which insured also foreign bottoms and cargoes and went much further than the present law, said:

The wise man provides for the future and he does not wait until a thing hits him in the head before he puts his fist up. * * The whole theory of it is to arrange the details of our legislation and have it in shape, when an emergency arises, rather than to wait until the time the emergency actually comes. That was the position we were in in 1914. The result was that when the war came we had to pass legislation and it had to be amended, I think, five different times in order to get a proper set-up of what this country required to keep its commerce going.